HEALTH CARE WOES APPARENT

By Michael SpecterBy Michael SpecterJune 15, 1990

After two decades of indifference to the idea of expanding the availability of medical services, a remarkably diverse group of American leaders now says the nation's health care system is lurching toward ruin.

From the urban East to the industrial heartland, from conservative physicians to radical activists, and most of all from the public that relies on it every day, a clear message has emerged: The cumbersome, expensive and inconsistent way of delivering health care in the United States needs immediate reform.

In the past, patient groups, advocates for the poor, and many public policy experts have called insistently for change. But spooked by spiraling costs that show no sign of abating, conservatives from places such as the Heritage Foundation and the nation's largest corporations have joined the chorus urging health care reform.

So many people in American society must go without any care, and the price paid by the rest -- in taxes, insurance premiums and fees -- has become so steep that surveys show few people continue to support the current system of financing and delivering health care.

Suddenly, the question has shifted from whether there should be major changes to when will they occur.

"The terms people use range from 'unacceptable' to 'intolerable,' " said Gail R. Wilensky, director of the Health Care Financing Administration. "You just don't find anybody left saying the system works fine. The opportunities for serious change are now greater than they have ever been."

More than one in four Americans put off medical treatment in the past year because they could not afford it, according to a recent national poll published by the Los Angeles Times. Half of all Americans believe they would be unable to afford good care if they became critically ill.

Yet, the consensus that the United States needs a better national plan for health care -- particularly for the 30 million to 40 million poor people who have no insurance -- does not mean there is agreement on how to solve the system's most serious problems, or what new plan might work better.

And even if a new way of financing health care magically became law overnight, many specialists are beginning to say it would not likely matter much.

Although soaring prices cause many of the problems, the health care system is also heavily shaped by the priorities and expectations of most Americans -- patients and doctors -- which may be more difficult to overcome.

Physicians and hospital administrators across the nation say the health care system has become dependent on massive and unreflective use of fancy machines, repeated tests to protect doctors against devastating malpractice suits and an ethic that suggests that no matter what the outcome, life should be prolonged at almost any cost.

"Does it have to get worse before we do anything?" asked Howard Hiatt, professor of medicine at Harvard Medical School. "I'm not even sure that's the point. I'm convinced that national health insurance by itself will not solve any major problems. What we need more are basic changes in the way in which we structure health care."

Nobody thinks that will be easy, or that it will be done quickly. Many specialists still question the value of seeking fundamental change in a system that, at its best, still delivers what is almost certainly the finest medical care money can buy. And for millions who have good insurance, the crisis remains removed.

Still, a clear shift in attitudes has taken place, health care experts agree. Over the past few years, for the first time, the American health care system has come far more often to be identified by its failings than by its greatest achievements.

In response, nearly every major physicians' organization has produced some formal paper calling for "reform." Congress has moved to adjust doctors fees, and it has entertained a dozen different packages aimed at tightening spending and getting health care to those who need it most and have least access to it.

Many of the nation's oldest citizens live in the realistic fear that a long illness will wipe out their life savings, reducing them to paupers. Millions of workers have no insurance, and even many of those who do cannot hope to pay bills of more than $100,000 that routinely buy the most sophisticated wizardry of modern medicine. Because of their costs, health insurance benefits have turned into the fiercest battleground in labor negotiations.

Millions who do have insurance are not covered adequately for catastrophic illnesses, and Medicaid, the program supposed to provide health care to poor Americans, serves no more than one-third of those who live below the poverty line. President Bush has called on Health and Human Services Secretary Louis W. Sullivan to recommend major changes in Medicaid, possibly by the end of the year.

Despite that concern, and the fact that 12 cents of every dollar Americans spend goes for health care, legislators and health policy analysts say that it will take a severe, prolonged crisis before Americans finally accept a major change in the way the system is structured.

According to a recent study by Henry Aaron of the Brookings Institution and William B. Schwartz of Tufts University, the practice of medicine does little to reward frugality, in part because insurance blurs the actual cost to many patients. For the past 20 years, most insured patients have paid out of their pockets only 10 cents of each dollar devoted to hospital care. They pay less than 25 cents of every dollar paid to physicians.

For fully insured patients -- and for the physicians who decide what care they need -- the system of incentives makes it easier to seek services, no matter what the price. With public and private costs of health care nearing $600 billion a year, there is a growing sense that minor reforms -- such as limiting doctors' fees, reducing federal funds for hospital stays or forcing business to provide insurance for employees -- will solve little.

"The danger of these efforts is that they would simply add new programs to a system that is inherently unsound," Stuart M. Butler and Edmund F. Haislmaier wrote in a surprisingly pessimistic recent study for the Heritage Foundation. "Because of its fundamental flaws, the gaps in the existing health care system can never be closed at acceptable cost without structural changes."

Most of the alarms remain muted, because for the majority of insured people -- including those who make decisions about how to spend tax money -- the problem has not yet turned into an emergency. Sen. Edward M. Kennedy (D-Mass.) has introduced legislation to guarantee a package of basic health care for all Americans, but in a country where the political will to raise taxes or take tough stands is often absent, few on Capitol Hill think it will pass this year.

In March, a sharply divided Bipartisan Commission on Comprehensive Health Care recommended an $86 billion-a-year program to provide health insurance and nursing care to every American who needs them. But no panel member could come up with specific ways to raise the money, and without additional cash such recommendations could never be achieved.

Analysts say reform will take years.

"It will happen by the end of the decade," said Uwe Reinhardt, professor of political economy at Princeton University and an expert on health policy and economics. "But first we will really have some dark days. Our system now is like a sick man who knows he is sick but doesn't want to go to the doctor because he fears what he might find out. We all know the system is failing. But almost nobody wants to sit down and figure out what we need to do to make it work."

Some liken the problem of reforming medical costs and administration to those of changing the U.S. tax code. No matter how clear the need for change is, few special interests are willing to give up what they hold dear.

Doctors want freedom from bureaucracy; they want to be able to make decisions without some insurance company or hospital board second-guessing them on an economic basis.

State governments do not want to take the unpopular step of raising taxes -- which may be politically unlikely anyway -- even though they sag under the load of hospital inflation.

But the biggest challenge, many experts say, is that the American people, who polls constantly show want more and better health services, also want more people to have access to them.

"The first thing that is going to have to happen is that the level of expectation about what people can expect from health care will have to be reduced," said James Todd, executive vice president of the American Medical Association. "Americans want all the access in the world, fancy technology, they want their choice of doctors and they want more people to have a fair shot at the system. There just is no way to grant all those wishes to everyone."

Todd and others say that even though many academic studies have shown poor people often fail to receive adequate health care, it will not be until patients are literally dying in the streets that Congress will be willing to make radical changes.

"We are a humane society," said Walter Maher, director of federal relations for the Chrysler Corp. and a vocal advocate of changing the health care system. "But most people really have no idea how serious this problem is, and how many people are poorly served. I just hope when we all wake up it's not too late to do something constructive."